Power Measurement

Failing the Market-Power Test:

How FERC's ruling could affect wholesale power markets.

The July ruling from the Federal Energy Regulatory Commission (FERC) on market-based rates, enacting two new market tests utilities must pass if they want to enter into wholesale power transactions at market rates, caught the attention of industry players. Those two tests-the pivotal-supplier test and the wholesale market-share test-stirred much debate and triggered several hearings and open forums. FERC generally stuck to its guns, adding a few minor provisions and a clause that allow companies that fail the market tests either to make their case in front of FERC or pass the delivered-price test. However, large investor-owned utilities (IOUs) that are outside of independent system operators (ISOs) and that don't belong to a control area with other members of similar size may as well book a ticket to Washington, D.C., if they want to sell power at market rates, because our analysis, developed here at Energy Velocity, shows that FERC is going to have a busy year.